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tv   On the Move  Bloomberg  May 19, 2015 3:00am-4:01am EDT

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vodafone reports revenue gain. there are a few of the things we will be watching. futures markets really punching higher. that is futures up by 93 points. it is the dax euros story manus cranny knows so well. here he is with your market open. manus: equity markets are taking their cue from the record breaking trend. we have japanese markets. topics at a seven-year high. the momentum might change. we have a little bit of data. we have consumer prices, but it's down to the autos. 20 straight months of rising auto registrations.
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stocks up 1.6%. monthly sales rose by 13% in april. bmw saw a slightly smaller rise. still that euphoria. this was the best run of gains in new models of car registrations on record in that marketplace. let's see what vodafone prices are coming in at. it is down 1.8%. caroline will run you through the numbers. it is what happens next. where did vodafone go? the stock actually declined. the utilities down a 10th of 1%.
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the dax isn't actually open. the cfo was saying they spend more with pfizer w an spend more on research and development. momentum beginning to grow. this was the worst performance in months yesterday. they are about to do a deal. down half a percent.
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when you look for interesting moves, you have got to love the market. ozzy dollar virtually unchanged. they are talking about slower growth. if you're looking for the theory about what runs together with greek bonds down, it is the euro swiss rate. it is getting back to good. it is nearly 141. -- one for one. we are getting back to some kind of normal relationship. >> thank you very much.
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moves in the bond market i want to talk about quickly. the executive order member speaking right now. this month and june for seasonable -- seasonal reasons. bond yields lower by a few basis points and italian 10 year down by six basis points. yesterday a big move in the opposite direction. the ecb is to accelerate qe now before the lowell. -- lull. the other story is greece. greek leaders say they are inches away. we haven't heard any
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confirmation from creditors. let's get both sides of this. we are joined by hans nichols. i want to start with you. the greek finance minister giving an interview yesterday. >> he backed away from the idea it had been gaining some currency. he did say it would be a yes or no on whether to stay in the euro. he talked about the idea of a restructuring of the debt. he said he couldn't foresee greece agreeing to a deal that didn't foresee some long-term restructuring. he said it wasn't imminent.
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>> could it be a matter of 24 hours? >> let's say in a week. >> we'll is have to think of it into compartments. one is a technical deal. how you have functionality and a political deal. we heard clearly there wasn't going to be time for a technical deal. they are too far apart. in terms of a political deal the greek government is hopeful. the problem is you don't have the finance ministers there, so the eurogroup might feel undercut. you don't have key players that will be attending that meeting. jonathan: i was hoping for a deal last week and the week before that. yesterday the big move was in the bond market. the big read across over the
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last 24 hours is the public support seems to be plunging as well. what is the view in athens right now? >> we had the first opinion poll yesterday that shows there are more people disagreeing that those that support it. with support right now stands around 35%. that is a steady decline from 45% last month and a staggering 72% in february. there are also some important elements in the opinion polls to discuss. one out of two people fear the possibility of a greg said. two out of forest -- of a grezit. -- grexit. if they had elections he would get 35% of the vote. new democracy would only get
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25%. one thing prime minister tsipras will think about, should there be a referendum? it is almost one out of two who say yes. we should have a referendum. jonathan: stay with us. i want to bring hans back in. we talked about the government. talk to me about the creditors. it has been a fractured approach across europe. we are hearing more about the juncker proposal. what is the proposal? >> the eu commission is denying the existence of the proposal. they are saying they don't know anything about it. what it says is part of the 7.2 billion, and even in a few
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additional funds this proposal would figure out a way to unlock some of that to get greece a temporary lifeline before you have a long-term negotiation. it's more of a bridge agreement. it reveals there are splits among the group we used to call the troika. that is that the eu commission wants to have some sort of short-term resolution where the line out of berlin and amsterdam has always been the need to complete the program. he walked it back and said, for there to be they need to sign off on it. this may not be the right venue to take place. you have heard angela merkel's he eurogroup to consummate the deal.
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not the prime minister's. not the leaders. you don't have a lot of crucial leaders. we are still at the same impasse, and there is tension between finance ministers and uecker -- juncker. jonathan: i don't pay much attention to it. greek car sales rising. this is some sort of safe haven. what is the story? >> this is a gauge of having something. the market was dead. unemployment slowly started slowing down. people were more confident. i think it is a case of the
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market waiting to invest. if you have the drachma, i wouldn't want the money parked outside of my house, would i? jonathan: thanks for joining us. we are joined by the ceo who oversees about $1 billion in assets. we are going to talk about greece. we have got those comments in the last 10 minutes. the ecb to accelerate qe before the market low. the market seems to like the fact they are going to frontload in may and june. a bit of a turnaround. you listen to those comments. should that make a difference? it's not going to change, is it? >> it's not going to change. it is encouraging to hear.
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coupled with a weaker euro. it helps european equities as well. it just seems to be noise. the only real beneficiary is the weak euro, which spills into global markets. >> the dax euro got weaker. as an equity investor, are you still just trading the euro when you are overweight european stocks? >> you have to remember the euro is about 11% undervalued versus the dollar. it is really interesting to see what is going on. earnings numbers are looking quite reasonable. this is an ok environment despite high valuations. this looks ok. >> coming up, it is noflation
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day. we breakdown price stagnation. we will break down at 20 past the hour. vodafone beating revenue estimates. more on why 0.1% growth never felt so good. those stories and more coming up a little later. equities higher across europe. good morning. ♪
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jonathan: good morning, and welcome back. it is no flechette day. -- noflation day. we're joined by jamie murray. stagflation, stagnation, you can call it what you want. what are we going to get? jamie: analysts surveyed are on balance guessing the level of rices will be no higher than the same time last year. the split with slightly negative price changes is about even. jonathan: i borrowed a chart. it brings you the breakdown. the bulk of this economy is the
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services sector. this is just energy. fuel storage. do you expect that to change much? >> we are approaching getting the peak impact. thereafter it is going to dissipate and fall out quite quickly. you will see inflation rising quite fast. jonathan: i monitored the press conference and there was a question about whether the bank of england should cut rates again. >> are we going to have that conversation if it stays near zero or are people going to continue to look through this? >> i think the low inflation number is energy driven. i think the first rate moves we will see will be a rate hike and not a rate cut. i think it's a non-issue.
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i think it's encouraging to see zero inflation rates. jonathan: how different is the question in the u.k. compared to the likes of europe? >> we see a similar outcome. the final reading today is flat. we are seeing similar affect. what we have here is slightly different. we have had appreciation against the euro. it tends to happen quite quickly. you should see an effect. >> talk about whether this is a short-term correction or the beginning of something much bigger. if you really do believe in the reflation trade, forget about today's numbers. do you want a yield that is only 60 basis points or do you
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seriously believe it has hit? >> low flechette and -- low flation is driven by yield. would you go out and buy 10 year government bonds in this market? >> easy to win the correction? or just five basis points a couple weeks ago? >> there is massive amounts of reflation into the economy. at the end of the day, why would you bought -- by bonds with such low yields. you are still getting 3% to 4% different yields, particularly in europe and the u.k. it makes no sense. jonathan: you will want to stay with us. thank you very much. coming up, assets set to
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overtake hedge funds this year. we will break it down after the break. stay with us. ♪
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jonathan: good morning, and welcome back. the tides are turning. those funds are poised to pull ahead.
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let's bring in one of the authors of the bloomberg report. i guess the big question, what is the story playing before our eyes? >> they are incredibly attractive to mom-and-pop investors. they are cheap and easy to use. you might as well buy it yourself. >> we have an asset manager. if i want to be overweight, i see the euro weakened. wider i need to invest in you? -- why do i need to invest in you? >> when it comes to making investment decisions, it relates to equities relative to cash and bonds and what is your exposure to the u.s. dollar?
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it's not about whether you own a german etf or a french edf. it is an allocation decision. that is why people come to us to manage their money. jonathan: it is a little more nuanced because a lot of that comes from hedge funds. as we go forward and people become more active with pensions, do you anticipate a bigger explosion geographically in the u.k.? >> the ingredients are there. they are very easy to use. underpinning all these gains is qe. if you think the european central bank is going to keep loose interest rate policies that has been underpinning gains and european stock. jonathan: i had someone tweet me
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and say is there an etf you can use to short bonds? there are three of them, and they were leveraged as well. trish was talking about getting more into her private portfolio. talk to me about the risks. it's amazing some of these should be regulated and it should only be professionals investing in them. >> they are a fantastic asset class that count for 40% of trading volumes. they are massive at the moment. they come with risk warnings. the commodities-based edf's use futures. there are some big tax issues. you cannot go into them without thinking about them carefully. there is lots of fast money going in and out.
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it is a speculative market as well as one for long-term investors. >> the money going in and out and about whether you can sell these assets the liquidity question is really considered. >> i think it is something that needs to be considered. you have to look at the volume of trade going through and also the short interest as well. some of the smaller emerging markets have quite small funds. if the market changes quickly you might not be a look to get out as quickly as you think. >> i think it is worth talking about hedge funds. they have not been having a good time. s&p gained 30%. it is pretty hard to beat that kind of game. you might as well by the index. -- buy the index.
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i agree. jonathan: thank you for joining us. we have a rally here in europe. i am going to talk about it after the break. stay with us. ♪
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jon: good morning and welcome to "on the move," 30 minutes into the session here in london. the ftse 100 pushing higher than half are sent. the dax up by 1.6%. yesterday as well up by 1.29%. significant move in the euro. buying me one dollar 11, dipping below 1.12. the ecb would accelerate qe eat now before the summer market low.
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this month and in june as well, we switch up the border and i will show you the reaction in the bond market across the eurozone field -- eurozone. lower by seven aces twice. italian 10 year, beating up the bond market yesterday areas yields were higher by 10 basis points and coming back now by eight basis points. whether that changes anything on the net aces, know that the fact that they are frontloading maybe giving bond market some enthusiasm. one of the top corporate stories that i want to talk about in the equity market vodafone posted its first service revenue gain in 11 quarters. caroline hyde has more. caroline: it is pretty minimal.
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10 straight quarters. we have had declining revenue. you look at the share prices not much of an exuberant reaction, that is coming down to the forecast for next year. the organic earnings growth will be 11.5 to 12 billion pounds. many felt it would be 11.9 billion or not really excelling the forecast, but they are trying to woo investors saying we will grow our dividends annually. that a lot they are promising at the moment. if you dig into the region this is where it gets interesting because deutsche bank is flagging the fact that there has been regulatory pressure. netherlands returns growth and czech republic they return to growth in the second half. they have germany italy, spain
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greece and romania still seeing declines. the declining rate is slowing and improving in the second half. germany is where the concern is. eating into the vodafone market share in germany. in hungary, across the year they are doing well and outside of europe, asia and the middle east and the asia-pacific doing well. italy up 12%. i think the stand out here is data. the data just showing through in the vodafone numbers. 40 in europe, pushing up data growth 18% on the year. jon: when we talk about future growth we are talking acquisitions. i we still talking potential acquisitions here? caroline: they are still keeping
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their beady eyes, particularly on portugal. here is the key challenge. we're seeing the data appetite ramp up. when you and i are using whatsapp, we are not making calls, how do they make the data pay. it is all about what they deem to be quad pay -- quadplay. but the cable company and deutschland and cable, they want to be able to offer not just mobile but you're fixed line and your broadband and even television their offering tv. i signed up a deal to offer dog -- broadband as well. at the moment they say the big deal they have already made are already doing well. synergy is coming through. no word on the potential asset they have been eyeing up in
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portugal. we understand they can be looking at that for a were up to 300 million euros. meanwhile, the ongoing talk about liberty global, would they ever do a deal with another juggernaut when it comes to cable television? citigroup have been saying liberty global looked good. bank of america thinks it is of vital deal. as of yet, no news there. they recently made a preliminary agreement there. i do think that all eyes on m&a in the future how they spend the competition and see so much dealmaking here in the u.k.. we're joining with bt and o2 joining with hutchins. jon: i just want to talk about greece quickly.
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ruling out the possibility of a greece aid deal. the greek government hoping for at least some kind of preliminary deal by the end of the week. he foresees a deal at the end of may or early june. i apologize for that. the principal analyst joins us now for more. quarters of no growth, is at a vodafone story or a telecom story. guest: vodafone is one of the latest companies to relieve their results.
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we have been seeing very encouraging results, mainly from european operators, some of which have started growing by a number. the fact that vodafone is showing zero growth or no growth, the revenues are encouraging. i think we need to look within those numbers to understand where it is that vodafone is -- the german market is surprisingly dipping a little bit. that is an important market.
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it is very important at the moment. they need to keep up with a market share and cannot let that slip. jon: that smells like acquisitions to me. the story over the last three years, the idea that you offer everything to a one-stop pitstop for everything and vodafone is still lacking a few things. sky and liberty global. when you see a potential partnership for the company? guest: sky and liberty global and you probably did not mention the most important one which is talk talk. we have been talking about what vodafone will do in the u.k. market.
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we will be building it up from scratch. are they going to be able to do that on their own? possibly not. do they need to do acquisitions? possible yes. jon: the strategy you see is not some big acquisition but a local partnership here in the u.k.. guest: the story of global versus local is important. in the past 10 years we sold companies creating a wide footprint. they were showing these maps market aftermarket. that strategy has not really paid off and companies are going back to national markets and looking at it and saying i want to be the dominant player in that single nation on markets. so making it a wide partnership
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to enter new markets, it doesn't always pay off. they will be better off in positioning themselves as a dominant player in the u.k. market. jon: isn't it cheaper just to make a big acquisition to get you into the europe market and set of trying to take off small acquisitions here and everywhere? guest: it sounds nice but i think it is better to be selective. jon: we talked about the legacy real estate at some of these u.k. supermarkets. over the last 10 years you saw an explosion of real estate, you see them on every single high street, some have three to four of the same brand. the change in consumer habits, i haven't gone to a shop to buy a phone for a long time. do you think it will change? guest: there will be some
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rationalization of their presence. some of the court -- shops have been closed and some have been refurbished. this is a question that keeps coming up. does it make sense that we shop online and get stuff delivered? or does it make sense to have a retail presence? it does. today we are buying phones and sim cards. tomorrow will probably buy other objects that connect to the internet. these companies will gradually get into the home. they start getting into the home with tv and broadband. there are many other things that you would want to be connected in your house in the future. this would play some role in their in you getting to buy this. jon: thank you for joining us. we have to leave it there. the analyst joining us to discuss vodafone.
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rio tinto reaches a deal with mongolia over a $5 million expansion copper and gold mine. we will the back after the break to talk about what it means for rio. a strong rally across europe this morning. ftse 100 up by 1.5%. the cac 40 up by 1.9%, the dax up by 200 points. a rally in the bond market as well. germany lower by seven basis points. a euro a weaker euro one point 1167 -- 1.1167. over the last two years, a quick calculation, the euro weaker by 2.45%. the worst two days since march 2011. the rally in the equity markets and the bond market. front loading qe in may and
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june. a lot to talk about. ♪
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jon: good morning and welcome back. 45 minutes into the session. let's lift the lid on the index and get you the top stock movers. caroline: the biggest gainer today is dtclp.
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it seems that this company seems to have fingers in every single pie. it has a bit of gas, tech health care as well. an irish company hiring 10,000 people. continuing operating profit. managing to boost profitability despite revenue being down. thank you very much indeed to the investor base. very significant profit growth to come but they are sending shares higher, up on most 10% on the back of m&a. they are making acquisitions and buying gas from shell purchased for almost 500 million euros. the market likes what this acquisition means and up goes the share price. a significant rally on earnings and m&a. volkswagen is leading the charge this morning renault also doing
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well because of european car sales. they are up 6.9%, 7% in april. 1.2 million cars being shifted. volkswagen did well but rental -- renault also doing well. on the downside there is a viva group -- aveva group so much speculation over the weekend that this could be an acquisition target. have also come out with their numbers today, overwrought we seeing earnings doing relatively well. everyone wanted to hear from the chief executive about that m&a speculation. the company is not being run for a sale. says the chief executive. he is on the eye out for an acquisition himself. saying they are looking for
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three to four attentional acquisition targets. that is some of the exuberance and that stock drop. jon: no lack of exuberance on the european indices this morning. rio tinto has settled its dispute with legally a over the $5.4 billion expansion of a copper and gold mine. let's get to a reporter for more from uncle you. why is this deal -- from longoria. -- mongolia. why is this deal so important, is this the end? reporter: hopefully. after being in discussion for two years, the plan addresses key shareholder issues. sets a great basis for the funding of the project. the ceo said lots of work needs to be done in the coming weeks
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and months. i think we have the right momentum. we will build on this momentum and i hope we will have soon very good underground mine. end quote. the development will bring mongolia over 5 billion u.s. dollars over the next two years. i employ over 13,000 workers, 95% of which are mongolians. they have laid off 1700 employees in august 2013 and another 300 june last year due to the delay of the underground mine. they said when all steps and approvals have been reached, the underground workforce will be re-mobilized. the mine is expected to amount to 30% of mongolia's economic
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output once working at full capacity by the year 2020. the company has seen its economy growth to 7.8% from last year. that is when the construction opened. the slowdown was mainly due to a collapse in the mining sector. jon: big thanks for joining us this morning. joining us from mongolia. coming up, we will hear from russia's richest man on sanctions, the oil price and his thoughts on vladimir putin. you don't want to miss that. looking at an equity market rallying across the board. over 300 percentage points in the last few trading days. a weaker euro and a rally in the equity market. ♪
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jon: welcome back to "on the move," i'm jonathan ferro live from the city of london. turning our attention to russia. with a wealth estimated at $17 billion, russia's richest man. the ceo of a mining company. despite sanctions, his personal wealth increased this year by nearly 50%. ryan chilcote sat down with the men yesterday for an exclusive interview where he highlighted
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the need to end sanctions. >> in my opinion nobody wants more sanctions. i don't think that anybody is interested to go further in terms of sanctions. it means at least we reached a certain stable level of tension. jon: ryan is joining me right now. what do his comments me to the investor? ryan: it means time to get in. shares up 26% since the beginning of this year. jon: wasn't last year the time to get in? ryan: exactly. i be that will continue. what that helped the share price was the devaluation of the ruble. it was the worst currency last year and is the best this year despite the fact that the
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central bank is meaning to push down -- is intervening to push down the ruble. their costs are in rubles and they sell metal in dollars. the fundamentals are important. nickel prices are rising. part of that is chinese demand. part of that is tesla, electric cars, they need high greed -- high-grade nickel. you and i are always talking about oil and what is going on with the oil price. you have to ask, what is the correlation between something like nickel, oil, palladium and platinum. >> i think that consumption of nickel is more connected with the general growth in the world economy. if the oil price is suitable for general growth, it means it is
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good for consumption of nickel. if the world gdp is declining or not developing, that is bad fort nickel -- bad for nickel. the higher gasoline and diesel is theoretically as less cars people are buying. the auto car production is a driver for palladium demand. which means that the question is it if rent -- is it different , it directly applies, but how they affect the auto car producers. jon: ryan chilcote will bring you more of that on "the pulse," do not miss that interview. they will be speaking to joseph stiglitz, a local -- nobel
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prize-winning writer. u.s. housing prices are down as well. if you want to talk about it on twitter. ♪ ♪ ♪ .
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francine: no deal and sites. juncker rules out a deal. -- no deal in sight. u.k. inflation figures are due in half an hour. could oil prices cause a dip in more than half a century? russia's richest person talks sanctions. the relationship with the west and life after putin in a bloomberg interview. ♪ francine: welcome to "the pulse ." i am francine lacqua. over the


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